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MARINA CIRCULAR NO.2017-04

TO ALL DOMESTIC SHIPPING COMPANIESI

OPERATORSI CHARTERERSI SHIP AGENTSI PRIVATEI
PUBLIC CORPORATIONI PARTNERSHIPI ASSOCIATION
AND OTHER MARITIME ENTITIES CONCERNED

SUBJECT RULES ON THE IMPORTATION OF PASSENGER SHIP~

Pursuant to Presidential Decree No. 474, Executive Order Nos. 125/~25-A,

and Section 20 of Republic Act No. 9295 and its Revised Implementing Rules and
Regulations, the Rules for the Importation of Passenger ships are hereby adopted
~dp~~~d.

I. OBJECTIVE

This Meinorandum Circular aims to provide guidelines on the importation of

passenger ship in order to ensure the continued viability of domestic shlppinq
operations and to encourage the development of a viable shipbuilding and ship
repair industry to support the expansion and modernization of the Philippine
domestic merchant marine fleet and its strict adherence to safety standards which
will ensure the seaworthiness of all sea-borne structures.

11. COVERAGE

This Circular Shall apply to all persons, corporations, partnerships, firms and
entities importing passenger ship intended for domestic snipping.

Ill. DEFINITION OF TERMS

1. ADMINISTRATION refers to the Maritime Industry Authority (MARINA).

2. AUTHENT1CAnON refers to an act of any Philippine

Embassy/Consulate General to have any legal document issued in the
foreign country where said Philippine Embassy/Consulate General is
stationed to be acknowJedgedor authenticated ('consularized') and will
bear the seal of the Embassy/Consulate General as well as the

Page] 1

Parkview Plaza Tel. Nos. : (632) 523-9078 I (6~2) 526-0971

984 Taft Avenue corner T.M. Kalaw Fax No. : (632) 524-2895
1000 Ermita, Manila, Philippines Website : www.marina.gov.ph
 signature of the authenticating officer in order for that document to
have any legal validity in the Phillppines."

3. AUTHORITY TO IMPORT refers to the document issued by the

Administration to an importer of any type of ship after compliance to the
herein requirements under Section VI. -;

4. BARE BOAT CHARTER refers to an arrangement for the hiring of a

vessel whereby no administration or technical maintenance is included
as part of the agreement. The charterer obtains possession and full
control of the vessel along with the legal and financial responslbillty for
it.

5. DOMESTIC SHIPPING refers to the transport of passengers or cargo,

or both, by ships duly registered and licensed under Philippine law to
engage in trade and commerce between and among Phitippme ports
and within Philippine territorial or internal waters, for ~ire or
compensation, with general or limited clientele, whether permanent,
occasional or incidental, with or without fixed routes, and dene for
contractual or commercial purposes." :

6. DOMESTIC SHIP OPERATOR or DOMESTIC SHIP OWNER may be

used interchangeably and refers to a citizen of the Philippines, or a
commercial partnership wholly owned by Filipinos, or a corporation at
least sixty percent (60%) of the capital of which is owned by Filipinos,
which is duly authorized by the Maritime Industry Authority to engage in
the business of domestic shlpplnq.? ;

7. DOMESTIC TRADE refers to the sale, barter or exchange of goods,

materials or products within the Philippines."

8. FASTCRAFT refers to a ship capable of maximum speed equal to or

exceeding 25 knots" and the construction of which is not in accordance
with the High Speed Craft Code. .

9. FOREIGN-REGISTERED SHIP refers to a ship owned and/or operated

by a foreign national or company, registered under foreign f1ag.6

1 Department of Foreign Affairs (DFA) definition

2 RA 9295
3 RA 9295
4 RA 9295

5 Australian Maritime Safety Authority (AMSA) definition

6 MC 2011-04

Page 12
 10. GROSS TONNAGE refers to the measure of the overall size of a ship
determined in accordance with the provision of the present
International Convention on Tonnage Measurement of Ships, 1969
(ITC 69).

11. IMPORTATION refers to the direct purchase, lease or charter of newly

constructed or previously owned ships from foreign sources or from
registered enterprises operating in special economic zones as this term
is defined in Republic Act No. 7916 entitled, ''The Special Economic
Zone Act. of 1995;.7 - -

12. PASSENGER SHIP refers to a ship authorized by the MARINA to carry

passengers. 8

13. SHIP OR VESSEL which may be used interchangeably, refers-to any

kind, class or type of craft or artificial contrivance capable of floating in
water, designed to be used, or capable of being used, as a means of
floating in water transport in the domestic trade for the carriage of
passengers or cargo, or both, utilizing its own motive power or that of
another,"

14. SHIP RE-STRUCTURING refers to major alteration such as, but not
limited to re-engining (replacement) of major propulsion machinery to
include major auxiliaries; jumboizing (Ienghtening) of ship's hull;
construction of additional deck above the main deck; enlargement,
transfer or movement of superstucture; alteration or compartrnentation
affecting watertight bulkheads; and conversion of spaces into loads for
liquids and/or holes for dry carqoes."? -

15. SHIPBUILDING refers to the design, construction, launchinq and

outfitting of all types of ships and watercraft; 11 '

16. SHIPREPAIR refers to the overhaul, refurbishment, renovation,

improvement, or alternation of the hull, machineries, equipment, outfits
and components of all types of ships; 12

17. SHIPYARD refers to the shipbuilding or repair facilities which have the
capability to lift ships above the waterline in order to effect ship work on
ships, appendages, structure, machinery and equipment; 13 --

7RA 9295
8 MC 2012-04
9 RA 9295
10 MC 104

11 RA 9295

12 RA 9295

Page 13
 18. SHIPBUILDER or SHIP REPAIRER refers to a citizen of the
Philippines, or a commercial partnership owned by majority of Filipinos,
or a corporation incorporated under the laws of the Philippines, the
capital of which is owned or controlled in any proportion by Filipinos or
by foreign nationals, or by both such Filipinos or foreign nationals or by
corporations whether Filipino or foreign-owned, duly authorized by the
Administration to engage in the business of shipbuilding or ship repair
or to otherwise operate a shipyard, graving dock or marine repair
yard."

19. SHIP AGE refers to the age of the ship reckoned from ship's date of
keel laying based on the Builder's Certificate or Certificate of Ship
Registry.

IV. GENERAL PROVISIONS

1. Companies/ entities which intend to import Passenger ship for

domestic Shipping, whether by direct purchase, lease or charter must
secure an Authority to Import from the Administration, in accordance
with the Rules set under this Circular.

2. Applicant shall indicate in their application the IACS Class of the

Passenger ship, the purpose for which said ships shall be utilized, its
routes or location, the area(s) of operation, the nature of the service(s)
to be rendered and the relevant particulars/features of the ship(s).
Passenger ships built for smooth water operation shall not be granted
Authority to Import.

3. Application for the issuance of Authority to Import shall be filed with the
Domestic Shipping Service (DSS). Applicant shall submit andcomply
with all documentary requirements and pay the correspondinq
processing fee, as specified in item VI and VII hereof.

4. All documents in foreign language shall be translated in English

language and authenticated by the Philippine Embassy/Consulate
General of the foreign country where documents originated.

V. SPECIFIC PROVISIONS

13 RA 9295
14 RA 9295

Page 14
1. AGE AND SIZE REQUIREMENTS

a. Passenger ships to be imported under this Circular should be no

less than 500GT and should not be more than 20 years old upon
the filing of the application.

b. Fastcrafts of less than 500GT may be imported under this circular in

the meantime pending issuance of another policy by the Mf.RINA
specifically for fastcrafts.

c. Ship re-structuring or re-building does not change the ship's aqe. A

day more than the maximum age required in the Importation of the
ship shall be more than the required maximum age requirement,
hence, importation will no longer be allowed. '

2. QUALIFICATION REQUIREMENTS

a. Only persons/corporations/partnerships/firms/entities duly

registered with SEC and/or OTI or cooperatives duly registered
with the Cooperative Development Authority in accordance with
the Philippine laws shall be allowed to acquire ships under this
circular'

b. The domestic ship operator or domestic ship owner intending to

import ships under this circular, for purposes of domestic
operation, shall be accredited under MARINA Circular No' 2006-
03 or its subsequent amendment.

3. CLASSIFICATION REQUIREMENTS

a. Passenger ships, whether newly built or previously owned,

which are to be covered under this circular shall be classed by
Internationally Accredited Classification Society (IACS), at the
time of importation.

b. Passenger ships to be imported should be in an acceptable

condition, without outstanding recommendations, as shpwn in
the latest survey report prepared by a marine surveyor
authorized by the Administration or by the government of the
country of origin of the ship. This fact has to be verified or
confirmed by an actual survey by the Administration to be
conducted after the release of the ship from the custody of the
Bureau of Customs.

. Page 15
 c. Second-hand Passenger Ships will be subjected to ultrasonic
thickness gauging by the surveyors of the Administration or by
an accredited private marine surveyors/recognized organization
prior to registration in the Phihppines.

4. ON CHARTEREDSHIPS

a. The contract shall be valid and effective for a period which in no

case shall be less than one (1) year. Pre-termination of lease or
charter within one (1) year from date of delivery of the ship shall
hold the charterer liable in the amount equivalent to the balance
of the 4.5% withholding tax due for the whole year. The
bareboat charterer shall not affect the deletion of the chartered
ship from Philippine registry without prior approval of the
Administration.

b. Any amendment to the charter party shall not be valid and

binding without prior approval of the Administration.

c. There shall be no "off-hire" clause in the bareboat charter

contract or party.

d. The operation of the ship shall be entirely in the hands of the

Philippine bareboat charterer and shall be free from participation
or interference by the foreign owner, except insofar as such acts
shall be directly to protect his rights as owner thereof.

e. The lessor or charterer shall be responsible for the payment of

the 4.5% withholding tax on gross bareboat charter hire.

5. MANNINGAND CREWING

All ships under this Circular shall be completely manned with Filipino
officers and crew and no foreign officer shall be allowed on board,
except as supernumerary and as provided for in any other regulations.
Said officers and crew must be certificated according to pertinent
national and international laws, rules and regulations.

6. SHIP'S RE-STRUCTURING

Page 16
 The ships plan for the proposed construction, conversion, alteration,
modification or rebuilding of all ships covered by this circular shall be
subjected to pre-evaluation by the Administration prior to the issuance
of the Authority to import."

7. TAX INCENTIVES

Applicants must comply with the provisions of this Circular in order to

avail of the incentives under EO 226, Investment Priority Plans of the
Board of Investments (BOI), the provisions of Republic Act NQ. 9337
and its Implementing Rules and Regulations and other incentives
granted by the Administration.

VI. DOCUMENTARY REQUIREMENTS

The following documentary requirements are to be submitted with the QSS for
the issuance of Authority to Import passenger ships: '

1. Letter of Application indicating the purpose of which the ship snail be

utilized, its routes or location, the area(s) of operation, the nature of the
service(s) to be rendered and the relevant particulars/features' of the
ship(s).

2. Original copies of the Deed of Sale, Charter Agreement and/or

Memorandum of Agreement if executed in the Philippines; authenticated
copies if executed in the foreign country.

3. Original copies of the Power of Attorney / Secretary's Certificate and/or

Board Resolution authorizing the signatory to the Deed of Sale, Charter
Agreement and/or Memorandum of Agreement if executed in the
Philippines; authenticated copies if executed in the foreign country.

4. Copy of the valid government issued identification cards of the signatories

to the Deed of Sale, Charter Agreement and/or Memorandum of
Agreement affixing three original signatures in the said copies. "

5. Copy of the latest certificate of good standing or company seal and/or

business registration of the ship's registered owners/sellers showing its
current list of directors or officers.

15 Refer to MC 2015-07 on other provisions/requirements for ship's construction and/or re-structuring

Page 17
6. Copy of the Ship's RegistrylNationality or in case of new building, copy of
the authenticated Shipbuilding Contract and Builder's Certificate.

7. IACS Clearance for ships to be constructed or IACS Class Certificate for

ships already constructed.

8. Latest Survey Report issued within the last six (6) months for ships already
constructed.

9. General Arrangement Plan

10.Original copy of an affidavit executed by the applicant indicating the

location of the ship at the time of the application and its estimated arrival in
the Philippines, its intended port of entry and its country of origin.

11.Original copy of a Resolution of the company's Board of Directors, certified

by the Board Secretary, authorizing the filing of the application and
designating the official or authorized representative to represent the
applicant company.

The following post-approval documentary requirements will be verified prior to

the issuance of clearance for the ship's registration by the Administration:

1. Original copy of the Protocol of Delivery and Acceptance

2. For ships acquired through direct purchase, the original Deletion

Certificate from the foreign registry where the ships was permanently
registered. .

3. For ships acquired through lease or charter, the original copy of the
consent from the country where the ship is permanently reqistered for
the said ship to be temporarily registered in the Philippines during the
period of the lease or charter. .

4. Original copy of a Certification that an inspection was conducted on the

ship by the Administration prior to the release from the Bureau of
Customs

5. Original copy of the proof of payment of duties and taxes

6. Original copy of the declaration of entry duly received by the Bureau of

Customs

Note: Except for the Deletion Certificate, all original documents may be
retained by the applicant after copies of the same is verified from the originals.

Page 18
VII. FEES AND CHARGES

Processing fee for the Issuance of Authority to Import in accordance with

MARINA Circular No. 2015-05 and its subsequent amendments. .

VIII. SANCTIONSAND PENALTIES

Violations of any provisions of this Circular shall be subject to the following

administrative fines and penalties: ,

Violation Penalty
11. Acquiring a Ship without Ships of less than Php 500,000.00 plus
securing the required 1,000 GT perpetual disqualification
Authority to Import from importation of ships
Ships of 1,000 GT Php 1,000,000.00 plus
or more perpetual disqualification
from importation of $hips
2. Non-compliance with the Php 200,000.00 per condition
conditions imposed in the
Authority to Import
3. Submission of fraudulent Php 1,000,000.00 plus perpetual disqualification
documents in the from importation of ships. This is without
Application of Authority to prejudice to filing of criminal charges in a proper
Import Court.

IX. REPEALINGCLAUSE

Any provisions of existing MARINA Circulars, and its amendments, or Rules

and Regulations, Orders or Decisions and other issuances or parts thereof
which are inconsistent with this Circular are hereby repealed, amended or
modified accordingly.

X. SEPARABILITY CLAUSE

Should any provision or part of this Circular be declared by competent

Authority to be invalid or unconstitutional, the remaining provisions or parts
hereof shall remain in full force and effect and shall continue to be valid and
effective.

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XI. EFFECTIVITY

Manila, Philippines, J_U_L _1_3_2_01_7 _

BY AUTHORITY OF THE BOARD:

This is to certify that the foregoing MARINA Circular No. J..Q17 -04 has 0
__

been approved by the MARINA Board in its 24th Regular Board Meeting held on
July 13, 2017.

-
ATTYo EUSEBIA C DLUM-80CO
Corporate Board Secretary

Date of Publication: August 15, 2017

Business Mirror
Date of Submission to ONAR:

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